INDEPENDENT DIRECTORS’ RESOURCE PROVISION CAPABILITY IN PUBLICLY-LISTED COMPANIES IN MALAYSIA

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Saeed Pahlevan Sharif, Yeoh Ken Kyid

DOI:10.22495/cocv11i3p8

Abstract

We explore the notion that independent directors’ primary role in developing capital markets is to act as key providers of distinctive resources and/or networks that are valuable to their respective firms. These resource provision capabilities become even more crucial in times of financial crisis. With a random sample of 289 companies listed on Bursa Malaysia, we test a set of hypotheses using paired sample t-test (for both pre-crisis (2007) and onset-of-crisis (2008) periods). Our results show that in times of crisis, companies exhibit a greater tendency to appoint more independent directors, especially those who (i) possess certain skills/resources that their firms specifically lack, and/or (ii) have strong political connections to secure government projects/funding/support.

Keywords: Resource Dependence Theory, Resource Provision Capability, Independent Directors, Malaysia, Global Credit Crisis

How to cite this paper: Sharif, S. P., & Kyid, Y. K. (2014). Independent directors’ resource provision capability in publicly-listed companies in Malaysia. Corporate Ownership & Control, 11(3), 113-121. http://dx.doi.org/10.22495/cocv11i3p8